Customer Disloyalty and Business as We Shift Toward Subjectivity

I had three different people recommend a book to me last week.  The book, Firms of Endearment: How World-Class Companies Profit from Passion and Purpose by Rajendra S. Sisodia, David B. Wolfe, and Jagdish N. Sheth is about a lot of things, especially the power of passion and purpose in business.  But it is also about the seemingly ever-increasing changing world we now live in.  And those changes keep coming, keep accelerating…  Change will continue, and spread.  This seems an absolute certainty.

As I read, this jumped out at me:

French Philosopher Pierre Levy, (who has devoted his professional life to studying the cultural and cognitive impacts of digital technologies) believes that the shift toward subjectivity may prove to be one of the most important considerations in business in this century.  …feelings and intuition (will) rise in stature in the common mind.

The authors point to the search of many to find deeper meaning in work, and they point to companies trying to make the world a better place.  For example:  Timberland CEO Jeffrey Swartz unabashedly says his company’s primary mission is to “make the world a better place.”  Swartz, and other leaders like him,

“are resolute and successful business professionals who augment their human-centered company visions with sound management skills and an unswerving commitment to do good buy all who are touched by their companies.”

But, back to the “shift toward subjectivity.”  Consider — “Subjectivity/subjective:  reality as perceived rather than as independent of mind; lacking in reality or substance.” 

So, is this era the era of “perceived reality?”  “Perceived value?”  If it is, then people will increasingly go to the companies that give them what they perceive as valuable at this moment.  And they will change companies as quickly as that perceived value dims.  In other words, loyalty of the customer is a thing of the past.  The customer’s loyalty is only loyalty to immediate perceived value.  And once that perception disappears, that customer will start looking around for an alternative.

I realize that many people have written many times about the loss of customer loyalty.  This “era of subjectivity” just helps me understand it a little better.  And since subjectivity is the opposite of objectivity, then this helps me understand how demonstrating “objective value” is not all that effective against the now more powerful subjective perception of value.

In a more-and-more data driven world, maybe the data we most need is the data telling us how to build emotional connections and deeper subjective value.  Sounds contradictory, doesn’t it?

What a challenging age we live in…

Alford Book is Revealing and Not Salacious

Over the last few weeks, you have undoubtedly heard the publicity surrounding the newsest revealed mistress during the presidency of John F. Kennedy. 

Her name is Mimi Alford, and over the past three weeks, she has appeared on practically every news and talk program that you can access.

I read her book this weekend.   It is entitled Once Upon a Secret: My Affair with President John F. Kennedy and its Aftermath (Random House, 2012).  You can read one of many reviews of the book here, published in the Wall Street Journal on February 13, 2012.

I found the book to be very personal, reflective, and insightful.  If you are looking for a “kiss-and-tell” book, it has those elements.  You will read the details of her first sexual encounter with JFK in Jackie’s bedroom, and how months later, he pressured her to perform oral sex on his key aide, Dave Powers.  But that is not what this book is about, nor does it focus on sex.

Instead, you will find a revealing narrative about key elements and events in the Kennedy administration through a different set of eyes.   Those are the eyes of a naive, but bright 19-year old White House intern.  I have read many books about Kennedy and his thousand days in office, and can honestly tell you that I read things here that I had not known before.  This book covers 18 months, from 1962-1963, and then, shifts to the rest of her life through two marriages.

She is now 68.  Her back cover picture makes her appear more attractive than what you see on talk shows.  You can find many of those interviews on YouTube if you want to see them, including her appearance on ABC’s The View, with its illustrative panel.

Is this worth buying and reading?  I think so.  It is overpriced at $25, in that it is less than 200 pages long.  But, I read enough.  I finished satisfied that my time was well-spent.

Maybe we have finally met the last JFK mistress.  At least, there are no other remaining footnotes or cryptically identified characters such as produced Mimi Alford.   Maybe not.  That’s not the point.

Her book gives us insight into an unsettling yet exciting time.  And, this book makes it clear she found both.

What do you think?  Let’s talk about it really soon.

 

 

 

 

Social Media is Just That – Social

I am not surprised at all to see the statistics published on February 20, 2012 by the Pew Research Center that reveal very few Americans receive political news from social networks.

Where do we get our information about politicians, campaigns, platforms, etc?   It’s not from social media.  Here is the breakdown, when Americans were asked to identify the sources they used regularly to follow political news.  Note this is not a “fixed pie” of 100%.  Rather, these numbers reflect how many Americans sampled identified a source:

Cable news (36%)

Local TV news (32%)

National network news (26%)

Internet (25%)

Local daily newspaper (20%)

Talk radio (16%)

Late-night comedy shows (9%)

Facebook (6%)

YouTube (3%)

Twitter (2%)

Why would this surprise anyone?  Social Media is just what it is – it is social.  It generates conversation, spreads opinions, and highlights reactions.   Social Media is not a source that generates or distributes information.  It is post-news.  It is filled with what people think about what they already know.

It is not that Social Media is unimportant.  In fact, it is the focus in my MBA research methods class this term at the University of Dallas.   My students are learning research methods by focusing their research on Social Media.

Americans don’t get their news from Social Media outlets.  Americans talk about the news through Social Media.

Are you surprised by this?  If so, let’s talk about it really soon!

 

Keeping Newspapers from Going the Route of the Milkman

Today, I picked my newspaper up off the lawn and brought it in to my house to read with my coffee.  I didn’t have to take my daughter to school because of President’s Day, so I came back inside my house.

From all indications, this ritual is on the road to extinction.   Many reports predict that all newspapers will transform to on-line versions where readers can see the content on a PC, mobile device, tablet, cell phone, or other electronic piece.  Indeed, some newspapers have already gone that route, in the midst of many others folding.

Many of you may not be old enough to remember the milkman.  When I was little, competing dairies would deliver two bottles of milk, ice cream, butter, and other goods directly to your door.   Only one service still does that today, Schwann’s, and it has added many other food items and ready-to-eat meals in order to be profitable.   If we don’t intervene, the delivery of daily print newspapers will go the way of the milkman.

This does not have to be the case!  I am reminded in the now-classic work by Jim Collins, Good-to-Great, where he discusses the Hedgehog Concept.  Of the three components, one is ”understanding the denominator that drives your economic engine.”  Or in other words,  what is it that keeps your lights turned on? 

For newspapers, this is not subscriptions.  The number of subscribers to daily and weekend newspapers continues to dwindle nationwide.  If the denominator were subscribers, print newspapers would be history. 

Clearly, the  economic factor is advertising.  As long as companies are willing to advertise in print editions of papers, we will still have them produced and delivered. 

If you love your paper delivered to your door, if you like picking it up off the lawn and taking it with you when you leave in the morning, the key is not to encourage your friends and co-workers to subscribe.  Rather, it is to frequent the advertisers who invest in the paper with your business, and further, to let them know that the ad they placed in the paper influenced your buying decision.  You can say at Macy’s, “I want to see the dress you advertised in the paper on Sunday,” which reinforces that is how you got there. 

The simplest way to reinforce print advertising is to use the coupons that businesses pay for to print, giving you discounts or tw0-for-one purchases.  If customers don’t use them, advertisers will stop paying for the newspapers to print them.  And, when advertisers stop paying for printing, that will turn out the lights for papers.

Think about that.  Do you really want a world where there are no print newspapers?  Where everyone stares at a cell phone or tablet on the bus?  Where you can’t sneak a peek at a headline and make a mental note to find more about it later?  Where you eat cereal with your spoon in one hand and your stylus in the other?  Where you have to send a link to a friend instead of clipping an article with a handwritte note and mailing it?  Really – do you also appreciate receiving e-Cards? 

Not me.  I’ve got my coupons from Saturday’s and Sunday’s paper.  I’m ready to turn them in this week.  I want to support print editions. 

The good news is that there are plenty of households that still subscribe to physical newspapers.  Many homes on my street, including me, have more than one paper thrown and waiting for them each day.  I also take the print edition of the Wall Street Journal.   We are not starting from a base of zero. 

If enough people want to keep papers printed, we can do that.  It is just a decision that enough of us need to make and want to do.

How about you?  Let’s talk about it really soon!

 

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Key Value Drivers: Do’s & Don’ts

A key value driver (KVD) is any variable that drives value for shareholders. But few firms can identify their KVDs and thus use them for forecasting and improvement. Identifying your KVDs requires a deep understanding of your business and much trial and error. Often, value drivers are combinations of variables. Alfred Rappaport, the founding father of value-based management, believes that most businesses can focus on just three to five indicators and capture an important part of their value-creation potential.

Note: I suggest you check out one of Rappaport’s articles, “Ten Ways to Create Shareholder Value,” HBR, September 2006, by clicking here.

Here is what Jeremy Hope and Steve Player recommend.

Action to Avoid

o Stop basing key decisions and improvement initiatives on earnings rather than free cash flow.

[Remember: Companies create value by generating future cash flows at rates of greater return than the cost of capital. The combination of revenue growth and return on invested capital (ROIC) drives value creation.]

Actions to Take

1. Teach managers the importance of free cash flow.
2. Make strategic decisions that maximize expected value, even at the expense of lowering near-term earnings.
3. Educate managers in value driver analysis.
4. Identify and eliminate key drivers that [begin italics] destroy [end italics] value.

Hope and Player: “Managing earnings is an obsession with many CEOs who are continuously under the spotlight of the investment community. They constantly tamper with the business by raising or cutting discretionary expenditures, such as R&D, marketing, and improvement initiatives, to meet investors’ expectations. The fixation with meeting budgets and managing earnings makes its difficult to focus on KVDs. Maximizing free cash flows is the name of the game.”

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For a thorough discussion of key value drivers and 39 other major business topics, I highly recommend their Beyond Performance Measurement: Why, When, and How to use 40 Tools and Best practices for Superior Business Performance, published by Harvard Review Press (February, 2012).

SUPPLEMENTARY READINGS

Saving Capitalism From Short-Termism: How to Build Long-Term Value and Take Back Our Financial Future
Alfred Rappaport

Understanding Michael Porter: The Essential Guide to Competition and Strategy
Joan Magretta

Good Strategy Bad Strategy: The Difference and Why It Matters
Richard Rumelt

Value Drivers: The Manager’s Guide for Driving Corporate Value Creation
Mark C. Scott

 

Serial Innovators: A book review by Bob Morris

Serial Innovators: Firms That Change the World
Claudio Feser
John Wiley & Sons (2012)

How and why continuous innovation and adaptation can help an organization “live” longer

What we have here is a “hybrid” narrative that develops on two separate but interdependent levels: a fictional account that focuses on Carl Berger (CEO of American Health Devices or AHD) and Claudio Feser’s exposition of a core thesis that continuous innovation and adaptation can help an organization “live” longer. Only a few years ago, these were corporate equivalents of thriving organisms: Bethlehem Steel, British Leyland, Commodore, Digital Equipment Corporation, Enron, General Foods, Lehman Brothers, Pan Am, Polaroid, RCA, Texaco, TWA, Union Carbide, Uniroyal, Westinghouse, and WorldCom. Today? All gone. And keep in mind, this is only a partial list of organizational fatalities. Of the Top 50 in 1960, only 13 are among the Top 50 in 2010. As for the other 37, 23 have either filed for bankruptcy or been acquired.  The remaining 14 are well-known but endangered.

Frankly, I am much less interested in fictional accounts (however well-told in narrative form with setting, characters, plot, conflicts, etc.) than I am in research-driven revelations based on real-world situations. Feser is a highly-skilled storyteller, to be sure, but I now focus on what he has to say about extending corporate longevity. Here are some of the passages that caught my eye in Chapters 1-5:

o  Daniel Kahneman and Amos Tversky’s pioneering research on three heuristics of judgment (anchoring, availability, and representativeness), Pages 27-29
o  Mental biases (framing, optimism, loss aversion, and status quo) and the rigidities of bounded rationality, Pages 29-32
o The Theory of Self-Efficacy Beliefs (i.e. task-specific self-confidence), Pages 40-45
o  Plasticity, learning, and behavioral change, Pages 61-63
o  Large-scale rewiring of brains, Pages 63-65

And then in Chapter 13:

o  The role of a company’s leaders during its transformation, Pages 161-162
o Two elements of Feser’s concept of developing a leadership legacy: (1) “building an organization that builds human passion, self-confidence, values and capabilities,” and (2) building an organization that “has a positive impact on society…one that – with its mission, values, and scale – continuously invents new products and services that make life healthier, better, safer; an organization that can change the world,” Pages 163-164

As I reviewed the material in the Appendix, “Analysis of the Top 50 U.S. Firms of 1960,” and learned what has since become of them, I was reminded of an observation by Ecclesiastes, “To every thing there is a season, and a time for every purpose under heaven.” However, as Charles Darwin’s research on what is now referred to as “natural selection” suggests, organisms – be they organizational or natural – either adapt or perish. Moreover, in recent years, adaption has required constant (“serial” and serious) innovation just to survive.

Although a world-class pragmatist, Feser has high-hopes and great expectations, indeed a rock-solid faith, that almost any organization can not only survive but thrive if (HUGE “if”) its leaders focus their thoughts and actions on what really matters, on doing good, on helping others grow. Yes, profitability is highly desirable and must be achieved and then sustained…but while “building institutions that develop passionate, principled, self-confident, learning individuals” who also do good, whose collective and collaborative initiatives “can have an impact on society.”

As for Carl Berger, good news. Everything eventually turned out well. The details of his story are best revealed within the narrative, in context. However, I do want to say I agree with Claudio Feser that Berger provides a compelling example of a young business leader who overcomes major challenges (including cancer), one who reminds us that we really can “live a life that matters, a life in which we can make a difference.”

21 Ways to Kill Your Creativity

Here is an excerpt from an article written by Michael Michalko, author of business classics that include Cracking Creativity: The Secrets of Creative Genius (2001), Thinkertoys: A Handbook of Creative-Thinking Techniques, 2nd Edition (2006), and Creative Thinkering: Putting Your Imagination to Work (2011).

Here are [seven of] 21 suggestions, recommendations and habits to help you kill your creativity, guaranteeing that you will never come up with a good idea. If used by supervisors effectively, they are also guaranteed to kill creative and innovative thinking throughout an entire organization.

To read the complete article and check out countless others. please click here.

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1. Always think the way you’ve always thought. When confronted with a problem, fixate on what you were taught about how past thinkers solved it. Then analytically select the most promising logical past approach and apply it to the problem, excluding all other possibilities.

2. Be focused. The key to logical, linear thinking is knowing what to exclude from your mental space. Exclude everything that is dissimilar, unrelated or is in some other domain from your subject. If you want to improve the can opener, only study existing can openers and how they are made. Then work on improving what exists.

3. Always do what you’ve always done. If you always do what you’ve always done, you’ll always get what you’ve always got. This will minimize surprises and mistakes. We are all a product of our experience. Stay within your comfort zone and don’t waste time and energy exploring what people in unrelated areas do.

4. Don’t embarrass yourself. You are labeled and categorized by your personal history, I.Q., and education. Don’t embarrass yourself and your family and friends by pretending to be something you’re not. Always remember an atom is an atom and cannot be anything else. Neither can you.

5. Know your limitations. Most of us do not have the genes, family history, intelligence, or education to be creative. Listen to your inner voice when it tells you that you are not creative. Play it safe. Do not take risks. If you work for yourself, don’t break what is not broken. If you work for someone else, remind yourself that you don’t get paid to create ideas. Be happy receiving a paycheck.

6. Be skeptical. Whenever an idea is offered, analyze it, criticize it and judge it. Never defer judgment. Be skeptical. Look for reasons why it can’t work or can’t be done. Take pride in being the devil’s advocate. Where’s the data? The research? Where’s the evidence it can work? What’s the history of the person who suggested the idea? Always remember people equate skepticism with wisdom.

7. Always listen to the experts. They spend their lives studying their subjects and know what’s possible and what is not. You do not. Respect their expertise and follow their advice religiously.

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To read the complete article and check out countless others. please click here.

Michael Michalko is one of the most highly acclaimed creativity experts in the world and author of the best sellers Thinkertoys (A Handbook of Business Creativity), ThinkPak (A Brainstorming Card Deck), and Cracking Creativity (The Secrets Of Creative Genius).

As an officer in the United States Army, Michael organized a team of NATO intelligence specialists and international academics in Frankfurt, Germany, to research, collect, and categorize all known inventive-thinking methods.  His international team applied those methods to various NATO military, political, and social problems and in doing so it produced a variety of breakthrough ideas and creative solutions to new and old problems.  After leaving the military, Michael facilitated CIA think tanks using his creative thinking techniques.

Michael later applied these creative-thinking techniques to problems in the corporate world with outstanding successes.  Michael has provided keynote speeches, workshops, and seminars on fostering creative thinking for clients who range from Fortune 500 corporations, such as DuPont, Kellogg’s, General Electric, Kodak, Microsoft, Exxon, General Motors, Ford, USA, AT&T, Wal-Mart, Gillette, and Hallmark, to associations and governmental agencies.  In addition to his work in the United States, Michael has worked with clients in countries around the world.

Find out more at http://www.creativethinking.net.